The first major price reports of the year, issued Thursday and Friday, showed almost no inflation marring the nation's economy.
The results should help calm price fears that have caused market interest rates to move up during the past few months on concerns that the Federal Reserve might raise rates.
Though the overall producer price index advanced 0.5% in January, the entire increase was in the volatile food and energy components. The core index, which excludes food and energy prices, showed underlying inflationary pressures to be benign.
Meanwhile, the consumer price index rose 0.1% in January, the Bureau of Labor Statistics reported Friday. That was less than generally expected by economists. On a year-over-year basis, consumer prices were up just 1.6%.
January's food and energy increases "are not indicative of wider inflation pressure and should at least partly reverse in February," said Ian Shepherdson, chief U.S. economist at High Frequency Economics of Valhalla, N.Y.
Mr. Shepherdson is among those who have cautioned that inflation may tick upward this year, and he noted that some wholesale prices rose in January for the first time in eight months. But he acknowledged that he had expected prices to rise more and termed the latest producer price index "a good report."
Edward Yardeni, chief economist at Deutsche Bank Securities, New York, said the big 1.8% jump in January energy prices is "already showing signs of unwinding."
On a year-over-year basis, producer prices for finished goods were up 2.3%, but a big part of the gain was the sizable December jump in tobacco prices following the tobacco industry's settlement of government lawsuits.
There were no further increases in tobacco prices in January, and the price of automobiles and apparel fell. Computer prices also continued their long slide. Meanwhile, wholesale prices further back in the pipeline at the crude and intermediate stages of production are falling. During the past year, prices for intermediate goods have fallen 2.4% and those for crude goods are down an even steeper 10.6%.
"Recent gains (in wholesale prices) were not widespread," Mr. Yardeni emphasized, adding moreover that "there's deflation in the pipeline."
